The Bank of Ghana (BoG) has taken a tough stand over banks in the country following the release of the Capital Requirements Directive which paves the way for the implementation of the order from July 1 and full enforcement from January 1, 2019.
This means that any banks that fails to meet the GH¢400 million by December 31, 2018 and subsequently failing to adhere to the directives such as not meeting the Capital Adequacy Ratio of 13 percent will have itself to blame.
The directive includes several stringent regulatory mechanisms that will make the banking industry more safe, sound and stronger, largely because of the focus on regulatory capital and its attendant risks elements-operational, credit and market risks.
According to the BoG, any bank operating outside the minimum standards with regard to its risk based capital requirement, eligible regulatory capital, risk exposures or operating practices, must notify BOG and take immediate action to rectify and strengthen its business within a set time acceptable to the Central Bank and/or be subjected to penalty under Section 33(1) of the Banks and Specialised Deposit-taking Institutions (BSDI) Act 2 Act.
It added that the Central Bank has power to increase the Capital Adequacy Ration for any bank not operating to minimum risk standards under Section 29(3) of the BSDI Act.
According to the directive, the BOG may, in writing, require a bank to exclude from its regulatory capital any component of capital that in its opinion does not represent a genuine contribution to the financial strength of the bank or reallocate to a lower category of capital any component of capital that in its opinion does not fully satisfy the requirements for the category of capital to which it was originally allocated.
It added that unrealized gain or losses on financial instruments recognized through accumulated other comprehensive income will not contribute to eligible regulatory capital. For other prudential and/or reporting purposes, the Central Bank said a bank may measure its financial instruments at fair value (both banking book and trading book) provided the requirements of International Financial Reporting Standards (IFRS) relating to the use of fair values are satisfied among others.
Former Finance Minister Seth Terkper has reiterated calls for the Nana Akufo-Addo government not to completely exit the International Monetary Fund (IMF) programme which is scheduled to end by April 2019.Ghana, according to him is a member of the IMF and must continue to remain part of the fund to avoid fiscal slippages. Ghana entered into an extended credit facility with the IMF for economic assistance in 2015.The deal came with an initial funding support of 918 million dollars to be disbursed under eight tranches.Under the agreement, government was expected to implement some policy initiatives such as freeze of public sector employment, reduction of budget deficit, and zero financing of the budget deficit by the Bank of Ghana.
Speaking at the final outdoor event of the Citi Business Festival named “Economic Outlook”, Mr. Terkper maintained that exiting the programme completely could lead government overspending in subsequent years.
He observed that some African countries have tested the system under the Policy Support Instrument of the IMF and it has enhanced fiscal discipline.
“I have expressed this views before, it’s been published. I believe rather than exit completely, we should take advantage of the policy support instrument of the programme which is what Kenya, Rwanda and other African middle income countries have with the IMF and that will afford us a smooth transition,” he stressed.
He cautioned that the signals sent by the current government on its desire to quickly exit the programme when it is over gives an impression that the country wants to go back to previous activities that have constantly taken Ghana back to the fund.
He pointed out that it is important to look at the past interaction with the fund to inform
government on how it will proceed going forward.
“Our affiliation with the IMF and the multilaterals span 1985 to 2000s and you can see that that was when our economic relations with the multilaterals including the World Bank, African Development Bank seriously started”
He argued that the period between 2000 and 2010 could be described as rapid expansion in services and in construction, when services overtook Agriculture as the largest share of Ghana’s GDP.
Mr. Terkper stated that the country’s relationship with the IMF and the multilaterals have proved positive with some policies that have propelled economic growth and development.
Deputy Finance Minister On his part, a Deputy Minister of Finance, Charles Adu Boahene who was part of a panel discussion said government is putting in measures to sustain fiscal stability after the country exits the IMF programme.
He assured that government is keen on reducing the fiscal deficit below 5 percent to avoid slippages.
Meanwhile, the President of the Private Enterprise Federation, Nana Osei Bonsu was of the view that the program has brought some hardship as government was constrained from spending to expand the economy.
Only 47,000 out of 2million pay direct taxes in Kumasi – Adu Boahen
Although Kumasi in the Ashanti Region has about two million residents who engage in income-earning activities, only 47,000 of them pay direct taxes to the state.
This was disclosed by a Deputy Minister of Finance, Charles Adu Boahen at Citi FM’s Economic Outlook programme held at the University of Ghana on Thursday.
“There’re a lot of expectations we [Ghanaians] have for government; yet we are not paying income taxes. We did an analysis at the GRA [Ghana Revenue Authority] in Kumasi. In Kumasi there are 47,000 personal income tax payers. There must be some 2 million registered voters meaning that these people are registered to vote but they are not paying taxes.”
“We just found this data and we discussed it two weeks ago. So it must be fairly recent. It’s unbelievable. The whole of Kumasi, there are only 47,000 PAYE payers. When I heard the number I was blown away,” he stated.